The local man received a telephone call stating he had won a million Euros but then had to keep making payments to release the "funds".
The council issued a warning to other people not to be taken in after the "heartless" case came to light.
Brighton council leader Brian Oxley said the "particularly cruel" case had reduced the man to poverty.
"They have reduced this person to the poverty line"
He said: "We are particularly concerned that the vulnerable amongst the community are being targeted by these scammers, with tantalising documents telling them that they have won thousands - or even millions - of pounds.
"The case involving this local gentleman is a particularly cruel one and it now transpires that over the past year he has sent somewhere in the region of £70,000 and there is no sign of any prize money.
"They have reduced this person to the poverty line, and he does not know where or how to get any of his money back."
Trading standards advice is that "if a so-called prize sounds too good to be true it probably is, unless you have purchased a lottery or prize draw ticket from a recognisable organisation".
A spokesman urged people not to be taken in by cold calls, or unexpected documents telling people they have won a fantastic holiday or cash.
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